Verdict in shale lawsuit cuts plaintiffs in 2 others

Two class-action lawsuits against Southwestern Energy Co. and three of its subsidiaries can now represent only about 4,400 people after a recent jury verdict in favor of the company in a third class-action lawsuit.

Three class-action cases had sought to represent thousands of Fayetteville Shale property owners who signed leases with Southwestern Energy subsidiary SEECO, claiming that Southwestern and its subsidiaries had wrongfully deducted profits for the companies from the checks they wrote to landowners for the use of their land. The other subsidiaries sued are Southwestern Energy Services Co. and DeSoto Gathering Co.

The simultaneous certification of the three class-action cases created what legal experts called a "race to judgment," in which the first case to be resolved will determine the outcome for nearly all class members.

In this case, the federal jury's verdict, because it was the first judgment to resolve one of the three cases, covers everyone who didn't opt out of the lawsuit. About 12,000 leases signed by people who owned land in the Fayetteville Shale were covered by the federal trial in which the jury sided with the company instead of landowners.

About 300 to 400 people opted out of being represented in the federal lawsuit -- Connie Jean Smith v. SEECO, et. al. -- according to Tim Holton, an attorney working on one of the other two cases, Sara Stewmon v. SEECO, et. al. People who owned another 4,000 leases were inadvertently never given notice that they were supposed to be covered by the federal lawsuit and were not affected by the jury's verdict.

"It's unfortunate what happened to those 8,000 people," said Daniel Smolen, an attorney representing the plaintiffs in Eldridge Snow v. SEECO, et. al, the first lawsuit filed against the companies.

In Smolen's case, parties had already reached a global settlement of up to $45 million, but the companies terminated that settlement after a jury was seated in the Smith case. The companies had motioned to delay the trial, citing the settlement and a need for class members to consider it, but were denied.

Smolen said he expects a trial date to be set next week on Snow v. SEECO, which seeks to represent owners of about 4,000 leases, instead of the 13,000 leases the settlement had agreed to cover.

Conway County Circuit Court had received a couple of objections to the settlement, which was agreed to May 18. They came from a group that claimed their properties should have been included in it and a man who believed the settlement wasn't enough money to pay back royalty owners.

On June 6, after requests to put the Smith v. SEECO federal trial on hold were denied, the companies pulled out of the settlement, which was allowed under the terms of the agreement. The companies could no longer go through with the settlement because of the conflicting nature of a settlement agreement pending at the same time as a trial was taking place over many of the same issues representing many of the same people.

"Final resolution of this action and the Similar Lawsuits therefore cannot occur through the Settlement Agreement," the filing reads.

The Stewmon case, which Holton is working on, has had few filings since having its class certification affirmed by the Arkansas Supreme Court in December.

Southwestern Energy declined to discuss the cases with the Arkansas Democrat-Gazette, but the company has said in a recent 8K filing that it expected the remaining lawsuits to have little effect on the company. An 8K is a "current report" filing that a company is required to make when significant events occur that would be of interest to shareholders.

"The Company currently does not anticipate that those other cases are likely to have a material adverse effect on the results of operations, financial position or cash flows of the Company and its subsidiaries taken as a whole," reads the company's June 19 8K filing, which was written after the outcome of the Smith trial.

Metro on 06/25/2017

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